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The earliest form of Sanskrit is found in the Rig Veda. After the Rig Veda was composed, Sanskrit language developed rapidly. The grammar became considerably simplified though still remaining complex. When the need was felt for proper pronunciation and understanding of the meaning of the older Vedic texts particularly at a time when many new words were introduced from non-Aryan sources, India developed the science of phonetics and grammar. There was also a belief that unless the Vedic texts were recited very accurately, it would bring misfortune to the reader.

Panini's great grammar the Ashtadhyayi was most probably composed towards the 4th century BC. It may be stated that with Panini the language attained its highest state of development and thereafter there was improvement only in its vocabulary. Side by side the sounds of Sanskrit were analysed with remarkable accuracy. The vowels and the consonants were all classified in a very scientific manner according to their mode of production. Panini's grammar may be justly described as one of the grandest achievements of any civilization. Panini had formulated some 4000 grammatical rules. Later Indian grammar texts could only be commentaries on the matchless work of Panini. Sanskrit spread to other parts of the country including countries like Cambodia and Srilanka.

When Buddhism emerged as a new religion people started speaking languages much simpler than Sanskrit. These were known as the Prakrit. In the pre-Gupta period the inscriptions especially the series of Ashoka's edicts are in Prakrit. Prakrits were simpler than Sanskrit in respect of both sound and grammar. One of the early Prakrit of considerable importance was Pali which became the language of one sect of the Buddhists.

Tamil is the oldest of Dravidian languages with a literature dating back to the earliest centauries after the beginning of the Christian era. These languages form an independent group with a distinctive character. From the very early times Tamil was affected by Sanskrit. Early Tamil literature contains relatively few words from Sanskrit and they were adapted to the Tamil phonetic system.